> - U+1F0C (capital alpha w/ psili and oxia) has a canonical
> decomposition of 0391 0313 0301
> - U+1FCE U+0391 has a canonical decomposition of 1FBF 0301 0391
> which has a compatibility decomposition of 0020 0313 0301 0391.
>
>Q: Which approach should be considered preferable?

Greek users have always used both practices for input of diacritics+capitals. However, practice A (U+1F0C) is the rule, while practice B (U+1FCE U+0391) is the exception, caused by font-specific problems (lack of accented capitals in some codepages/printer fonts or ugly glyphs in low-res fixed fonts). I would go for practice A, but leave option B available for input if possible. For example, the texts in <http://www.gospel.gr> use practice B.

and Rick McGowan commented:

> The clearest way to encode polytonic Greek text is to avoid using all the
> extended precomposed stuff. Use fully decomposed sequences.
>
> Some people might have a different opinion, of course.

Well, it is true that the tendency in Greece is to use the precomposed characters of Greek and Greek Extended and not decomposed sequences. For a number of reasons, I don't see decomposed sequences for Greek implemented in the near future (at least in Greece and Cyprus where the large user base lives).